User login

Analyze This

You are here

Catchy title, check. Inexhaustible vocabulary and willingness to say in fifteen words what could be said in three, check. Basic understanding of gaming industry mechanics, check. Prominent outlet with available pool of readers, check. Certainty at the superiority of own comments, double check. With just these easy to acquire tools, anyone can be a gaming analyst. No seriously, anyone. Which, as it turns out, is pretty much what most amateur gaming analysts already know and hope secretly that no one finds out.

And now that there is lots of great negative press to feed upon, it's easier than ever to tap into that growing sense of disquiet and gloom that's washed ashore in the wake of Holiday Season 2005. You're likely to see a lot of articles that start like this: Reading the gaming news of late, it would be easy to conclude that our favorite past time is suffering under a significant downturn. Headlines speak of layoffs, cancelled games, legislation, closing studios, and declining sales ... How do I know? Because that's very nearly the opening you read on the front page today, just another diminished third in the perpetual minor harmony of gaming editorials. It's the sort of thing you'll probably read a lot in the coming weeks, because a significant slump in sales is, if you're a self-proclaimed gaming analyst, like picking the trifecta at Pimlico and then on the way out the door hitting the progressive on the dollar slots.

And, most important, it's all smoke and mirrors. You see, kiddies, there is no downturn. Allow me to explain"…

Wait, before I explain, let me lay out the mainstream argument a bit. I offer, for your delicate consumption, a host of dismal and melancholylinks about gaming's current sad state. Feed, my young ones, on the luscious ennui of an industry! Lament, children, for the king is dead, the queen is in cahoots with the enemy, and Hamlet's got poison on his blade. Cry havoc physics engine, and let loose Dogs of War III Extreme Edition, for gaming is doomed. Additionally, PC games, the Xbox 360, the Gamecube, Nintendo corporation, last generation systems, and independent developers are, to varying degrees, also doomed.

Just look at the carefully chosen numbers. There are eighteens, and percentages, and minus signs, and arrows pointing down. We are in the last days, the end times, the Y2K6 of gaming's inevitable spiral into anachronistic oblivion, and man isn't it fun to point out the intricate weaving of our express handbasket to hell. You'd think so, at least, should you believe everything you read.

I concede, things are not bright sunshine and frolicking puppies for the gaming industry at the moment. There's a less-than-stellar Xbox 360 launch, a lot of very proficient people pocketing pale pink slips, a disappointing sales sheet from the most recent holiday season, and a lot of industry insiders wailing and gnashing their teeth. Now is the winter of our discombobulation. In short, gaming seems to be at its own throat lately, and from the cheap seats, watching happily, cackle the pundits, cheering the bloodletting.

There's no news like bad news.

The argument can, and is, made that a series of serious issues have coalesced to form a muddy quagmire into which gaming has begun to spin its wheels. Issues like used game sales, piracy, the rising costs of development, and the lack of stellar AAA titles have conspired, as if in a smoky war-room with giant televisions projecting spinning wire-frame globes, to stall the gaming juggernaut. The argument has some merit. Well, not the smoking war-room part, but there's definitely some serious issues that are proving particularly troubling for game companies.

Piracy is a rampant and continued problem, evidenced by the fact that some of the most prominent purveyors of copywritten media like games, movies and music rank among the top 1000 of all websites (source: Alexa), with more than a hundred million page views per day, traffic that ranks equal to sites like Gamespy. But, then, piracy is hardly a new issue, is it?

On the mall front, retailers have indicated they don't give a flying hyena how people like Mark Rein feel about their sales of used games. I spoke to several specialty retail managers in researching their feeling on used game sales and whether they felt bad about killing gaming, and the response is unambiguous: Corporate says used is a priority; period, end of discussion. At the beginning of 2005, prior to the merger, EB alone was expecting to increase it's total revenue from the sale of used games into the double digit percentages of all sales, a leap that would mean nearly doubling their used output for the year prior. One manager put it best like this, "It all comes down to profit. Used games make more money for my store, so it's what I sell."

For the analysts, insiders, and statisticians, however, used games simply don't exist, and the dollars that funnel toward "preowned", as retailers would have us call them, cross some fiscal event horizon and disappear entirely from the market. So, when these dour articles talk about a gaming downturn, they aren't actually talking about the number of games actually sold to people. They are talking, very specifically, about the number of _new_ games sold, and they are talking about a total dollar value. They are constraining the scope of the discussion so that pundits exactly like yours truly will bumble onto the internet, and the pages of magazines, and onto your television screen while you're waiting to watch reruns of The Man Show, and tell you that if you don't buy the right games, the ones that the industry wants you to buy, then it's all going to melt away like a witch in a rainstorm. Seriously, though, wouldn't the wicked witch have slowly melted over time just from the humidity in the air? I digress.

It's baloney. What isn't being talked about is the fact that consumers are buying more games than they ever have. They are just spreading the money out a bit more, putting dollars into the used market, into handheld devices, into services like Live Arcade, and into direct downloads. The handheld market alone, which just cracked into the billion dollar range in 2004, soared 62% to 1.6 billion for 2005 on the backs of the ever sturdy GBA, the largely successful launch of the PSP, and the coming of age of the DS. Let's also not be quick to forget that handheld titles usually run at a significantly lower price point than traditional console titles, so if there's a downturn in total dollar value, it doesn't reflect the sale of fewer titles from a volume standpoint. It just means that customers didn't buy into 2005's $2.00 leap in the cost of the average console title.

That is, if 2005 hadn't actually been a record-breaking year in total dollar sales for video games. Which it was. In reality, the industry cracked the ten billion dollar mark in 2005 with an annual growth of six percent , a number that doesn't take into account the growth of the used market which is better than another billion. So, the conclusion we must draw is that following another record-breaking year in gaming sales, more thumbs than ever flicking bad guys to pixilated dust, the industry is spiraling into a cataclysmic oblivion? Seriously?

The problem is that we didn't buy the right games. Go ahead, hang your head in shame. I can wait. We had the temerity to buy handheld games, the brass ones to shell out a few bones less for a used copy of the RPG The Spiky Hair Chronicles of Angst VII, the audacity to not be able to find an Xbox 360, and the unmitigated gall to buy budget games like Geometry Wars when we did find one instead of the quadriplegic Madden offering which fell onto store shelves like a hairball from a sick cat. Don't you see, gamers? You're killing gaming!

Nevermind, that there's a natural transition into a new generation of consoles. Nevermind, that the costs for developing for these new systems will drop rapidly in the coming year, opening the door for the large library of games to which we've grown accustomed. Ignore that fact that where in 2004 we saw Grand Theft Auto San Andreas, Halo 2, Half-Life 2, and World of Warcraft all released in a single month's span, where this past holiday we had our choice of Age of Empires III, Gun, Star Wars Battlefront 2, and True Crime 2. Pretend not to notice that the games just didn't drive gamers, crumpled and sweaty dollar bills in hand, to the point-of-purchase. Notice only that a few choice arrows point the wrong way, and rush out to buy whatever game this month's scar-ridden rap phenom of choice has whored himself onto.

If there is a downturn, a slump, a dip in the market, or a fluctuation in the financial profitability forecasts for quarter two fiscal 2006, then it might very well be attributed to the fact that consumers are trying tell the industry something. Maybe, just maybe, publishers can't slap a marketing budget on the aft-end of a lipstick-wearing mule, and convince the entire market to soul-kiss the donkey. And, if that's even a little bit true, then the industry is healthier than it's ever been.

Your numbers don't matter. The fact that more total dollars are getting spent in gaming doesn't mean a damn thing. You can sneer all you like about how the 'gaming market' is still so large, but the simple fact is... used game sales don't drive new development. Only new game sales do that. Money spent on used games is invisible to analysts for a reason.

The pundits aren't claiming that 'gaming' is dying; that would be dumb, since it's obviously not. What they are complaining about is that most games, particularly PC games, don't make money. Even very good games just don't move the numbers like they used to. Console game sales were down very sharply this Christmas, ostensibly because gamers don't want games for the 'obsolete' systems.. and being unable to get "teh new hotness".

Game development is an extremely risky business... coming up with a game that people like and buy in big numbers is far from a science. So what most game companies do is repeat the thing that worked last time.... Flying Son of Mutant Monster X, Now With Flame Breath! EA is particularly bad at this, churning out the same crap over and over. Why? Because games are really expensive, and they don't want to risk that much money on an "unproven concept".

If they shovel out the same crap every year in a new box, people eventually will stop buying it. It's my belief that this is a lot of the reason console game sales were so far down... the 360 was the scapegoat, but the _real_ reason is because there just weren't that many compelling new games to buy. As you so eloquently point out, Madden MCMLXXXVII just isn't very good. So sales drop, and the companies hunker down even more, and try to go for even SURER bets. It's a death spiral.

Gaming as we have known it most surely is dying. The genres that have driven the behemoth EA to such size are all petering out at once; they failed to invest in new ideas. It is likely that as they approach true failure, they will start really innovating (a gun to one's head inspires creativity wonderfully), and likely we'll see a few very, very cool games from them. Whether or not it will be enough to save them... who knows?

Fortunately, it's a process of creative destruction; new genres will arise, perhaps driving new publishers to large size. But there could be a good couple years in there that are fairly dry. I'm really hoping that Nintendo will knock it out of the park with the Revolution, and will start the ascent of new gaming styles before the old ones completely tank.

It's no coincidence that Nintendo is doing so well; they are trying genuinely new things. The DS was very innovative, even though most of us veteran gamers thought it was crap. As it turns out, they were right and we were wrong.. and they've moved something like ten MILLION of the stupid things. (I bought one!) The reason handheld games are selling is because they are _good_. That doesn't change the fact that EA games mostly suck, and they'll likely suck more and more as the company gets into worse and worse financial trouble.

What the gaming journalists are mostly sensing is the destruction part of creative destruction; there's going to be a great deal of bloodletting in the games biz this year and next.

Consider: if they stopped making games right this second, we'd all be happy catching up with the backlog for a year or two.

The REAL problem is a large supply of low-quality goods, when the demand is for a much smaller number of higher-quality goods. EA, the shoveler of schlock, is in trouble... and that means at least some of the gaming analysts are going to be losing their jobs.

Except we've been hearing this for a decade, which means it's either the slowest death EVAR or nothing more than the shrill abrasive call of gloomy chicken littles. So it's gotten to the point where veteran gamers like us snort and laugh every time we hear it.

Certis: Quintin is both smart and attractive.

Fedaykin98: Good lord, I wouldn't have expected brilliance like that from that nemeslut Quintin Stone!

Yonder: It's weird to say this, but Quintin Stone may be the wisest person here.

Of course used sales matter. I know why developers and publishers don't want them to matter (because they don't get a cut), but that's irrelelvant. They matter because they show that demand has not waned, that customers are still buying games. And most importantly, they matter because they will drive the market to react, hopefully by forcing companies to lower prices to be competitive, but probably by taking Draconian measures. They matter because, in the end, the total amount of dollars people are willing to spend on games is relevant, and eventually someone's going to get brains enough in their head to go get that market instead of just bitching about it.

Even very good games just don't move the numbers like they used to.

Like Halo 2, World of Warcraft, Resident Evil 4, or GTA:SA? Those moved boatloads of cash, and prove that when the industry produces something worth playing, people pony up the cash. No, mediocre crap like Gun, and True Crime, and AoE 3 don't move the same volume, and nor should they.

Console game sales were down very sharply this Christmas, ostensibly because gamers don't want games for the 'obsolete' systems.. and being unable to get "teh new hotness".

A temporary problem that will resolve itself in a few months.

If they shovel out the same crap every year in a new box, people eventually will stop buying it.

They won't stop buying it. But, they may decide they won't spend $60 on it. They'll sit and wait for it to hit the bargain bin, or pick it up used. Again, not what the industry wants us to do, but frankly I'm tired of giving a @$%# what the industry wants. If they keep ejaculating the same game, then why would I want to buy new, buy in the first few weeks at full price, just to encourage them to make more. Again, what we're seeing is consumers beginning to take a stand and drive the industry, and what you're buying into is that that spells some kind of death spiral.

There's no shortage of people who will and want to make games. If companies like EA and Activision run themselves out of business, who's to say that's a terrible thing? I think those massive publishers are a driving force in market stagnation. Think of it like the airline industry. The legacy publishers are bloated, creatively bankrupt, bureaucratic, and treat their partners poorly (Christ, BattleField Modern Combat had to sell 4 million copies before EA was going to share royalties with the developer), while new smaller streamlined carriers can provide the same service with better customer support at a lower price. It can be done.

We've just never given them a reason to do it before.

But there could be a good couple years in there that are fairly dry.

No, there'll be a few months while the industry transitions to next-gen consoles and then it'll be back to normal. Again, there is no downturn.

The reason handheld games are selling is because they are _good_.

I agree! Also, the handhelds are further in their next generation cycle. They are the roadmap for what the 360 landscape will look like in six months. We've all forgotten that four months after the DS released everyone was proclaiming it DOA with no new titles. Now it's the market darling.

The thing about smart people is they seem like crazy people to dumb people -- Thing I saw on the Internet

One things people forget about the used games market is that it helps new games sales as much as it hurts. Do you think as many people would pay $50 10-hour-to-finish-shooter-fest-2 if they couldn't sell it back to the store for $20 back in three days time? If developers really don't want this to be an issue, they should make games that people actually want to keep.

Ely, Mal, you are both peppering largely congruent arguments with lots of hot rethoric right now. Not sure whether that'll lead you anywhere, but please don't stop, I just got popcorn :D

Agreed. The main difference I can detect between the two sides of that debate is one of scale. Both seem to agree that change is imminent (as do most other pundits). No one can dispute that this will be a year of change.

I, too, think that describing the industry as "in collapse" is a bit rediculous, but tell that to the folks who are being pushed out of their jobs in the industry and will likely have nowhere else to go. I knew a lot of guys in Austin who felt pretty down about the state of the industry ten years ago when their little part of it imploded. For every genius artist who will go on to found a small development house, there are probably five or six other guys who's skills aren't that easily transferable, so It's back to the real world for them.

In some respects, the industry is indeed collapsing, yet we will most likely continue to have games to play. Probably. Who the hell knows, though. Seriously. It's fun to shine a penlight at shadows on the wall and play "Spot the Trend," though isn't it?

Games will not die. I know this, popular entertainment that makes billions doesn't just taper out. The only thing to be weary about is the current state of Mature games. When even prositutes are against you, telling parents not to buy your game, you have a serious issue.

For every genius artist who will go on to found a small development house, there are probably five or six other guys who's skills aren't that easily transferable, so It's back to the real world for them.

Not sure what you meant by "back to the real world" but it's kind of disturbing to think that people might not acknowledge people who work in the games industry as part of the "real world". Do they not work in an office like most people? Do they not work overtime? Do they not have to meet deadlines? Are they not responsible for investments in the tens of millions of dollars?

Sure, working in the industry can be great, but it's still work. And damn hard work, too. I doubt it's what you intendeed Fletcher, but your comments struck a nerve and underscores how far too many people seem to think that everyone working in this industry is just milking a gravy-train ride to Disney World.

Oh, and the comments about the handhelds current state being a foreshadow of the X360 in 6 months is spot-on. Let's not forget, that EA was blaming disappointing sales in late 2004 on people waiting to buy the X360 in 2005. There is some cause for concern here, but it's mostly a lot of excuse making because nobody can face the facts that there games aren't all worth buying. When the PS2 first came out, it took everyone a little while to get ramped up and moving. But once they did, everyone was able to crank out sequel after sequel every year. It's the first major time in gaming when it happened on that sort of scale. And finally after 3+ years of straight redundancy, the people are keeping their wallets closed.

There's still tons of originality left out there. It just needs to be found and then celebrated.

And we can start with this year's dose of perspective when Okami comes out this spring.

For every genius artist who will go on to found a small development house, there are probably five or six other guys who's skills aren't that easily transferable, so It's back to the real world for them.

Not sure what you meant by "back to the real world" but it's kind of disturbing to think that people might not acknowledge people who work in the games industry as part of the "real world". Do they not work in an office like most people? Do they not work overtime? Do they not have to meet deadlines? Are they not responsible for investments in the tens of millions of dollars?

My point was that working in a non-entertainment industry office is a harsh wake-up for entertainment industry types. I was not suggesting that people who make entertainment live in fantasy land. I've been in the industry for my entire life. I know better. On this subject, I have lots of first and second-hand experience

My point was that working in a non-entertainment industry office is a harsh wake-up for entertainment industry types.

Well, having given a few years of my life to the entertainment industry, I can say that moving to a non-entertainment office was a very pleasant wake-up. And it got even better when I moved over to an IT job.

Crim, that's an excellent point. I know a few people who have been past victims of EA layoffs, and they all tell a similar story. A non-gaming-industry programming or IT gig is not as "fun" in theory but you are better paid for working fewer hours. Of course, you don't know any of that when EA is recruiting you right out of a college internship.

It's true. I could make a ton more money and work far fewer hours doing basically the same work I do now, were I to go outside my industry, but it would still suck. For me. I'm just not built for life on "the outside." I can see how the transition would be a good thing for some folks, though. Folks who like ... money and ... time off and stuff. Freaks.

Except we've been hearing this for a decade, which means it's either the slowest death EVAR or nothing more than the shrill abrasive call of gloomy chicken littles. So it's gotten to the point where veteran gamers like us snort and laugh every time we hear it.

Or perhaps the "death of gaming as we know it" is a recurring, almost continual truth; and one to be embraced. Surely gaming as we knew it a decade ago is dead. It is for me. The current state of events is always "dying" in most walks of life. Dinosaurs must perish to make way for the mammalians.

This is the life we chose, the life we lead. And there is only one guarantee: none of us will see heaven. Sorry, that last bit didn't apply.

Consider: if they stopped making games right this second, we'd all be happy catching up with the backlog for a year or two.

Exactly. I don't even see myself buying the PS3 or Xbox 360 because they are pretty much the exact same games that I still have waiting on my backlog list, except with better graphics.

I will maybe get the Revolution just because I still have some hope in them doing something that will make me cream my pants a little. Or if they let us download games that would otherwise be really hard to get for a decent price. Sadly, Nintendo hasn't mentioned what games will be released for download yet.

Or have they?

Anyway, I guess I'm saying that I agree that gaming is going downhill. It's going down hard, and I don't see the 360 or PS3 trying to save it. They are boasting online play too much, and that will severely subtract from the single player of a lot of games. I don't want to have nothing but deathmatch games to choose from. I want more unique games like Earthbound, Shadow of the Colossus, Ico, and Billy Hatcher. Yes, I liked Billy Hatcher.

Hell, give me a second life of Pokemon or Harvest Moon. We need a new series like those to shock the industry back to its senses. I wouldn't be ashamed to play something supposidly kiddy as long as it was fun and hopefully new and semi-creative.

Maybe, just maybe, publishers can't slap a marketing budget on the aft-end of a lipstick-wearing mule, and convince the entire market to soul-kiss the donkey.

Best line ever! Excellent article. Having been on both the dealing and receiving end of business statistics, it is truly amazing how much stats can be manipulated. The press takes this to dizzying new heights, especially the non-gaming specific mediums. A welcome dose of the "alternate reality." Kudos. Much enjoyed.

"And thus I clothe my naked villany with odd old ends stol'n forth of Holy Writ, and seem a saint when most I play the devil." ~ William Shakespeare

It is certainly going to be a "transition" year.. with many publishers naturally becoming confused and cautious. One could almost simply say change is afoot!

This last year I've seen more venture money than the previous 3 years combined injected into the "gaming industry" which is certainly a good sign.. because it simply means that finally VC's are seeing chinks in the armor of the big publishers and new opportunities for profit outside the traditional realm of Dev/Pub/Retail "mode".

"Outside" money into the gaming industry is a good thing..simply because it will fuel change and lend "power" to sources outside the big pubs.

Look at titles like www.secondlife.com which did slightly over $2million US in 05. Pretty impressive for essentially a non-game.

Look at Xbox Live Marketplace.. and imagine how difficult (but smart) Microsoft has to be to prevent it from simply become a dumping ground for 8bit and 16bit shovelware. I know certain "gambling" companies are frothing at the mouth to find some sort of way into Live and of course US legality.

We have yet to even see what the PS3 and Revolution will bring to the table once released.. and given Nintendo's track record lately and despite what I thought Nintendo has been hitting homeruns with their strategies (other than online..hello friend codes?)

I think the 360 and Vista will eventually bring some positive signs to the PC market.. if anything simply by new exposure. What would really be great is some sort of really good cross platform PC/360 online title.

I look to Microsoft to bring "Live" to Vista in 2007... with support for the Xbox 360 standards we've become used to.. and I think such a thing will be a great boost for PC gaming.

Aint nothing new about the world order..it's been playing since the day they put George Washington on a quarterDelivering Truth while the 10% deliver lies.

I now leave you to return to my normally-scheduled 90-hour work week. But at least I get to do it from home freelance-style. ;)

Yeah, don't get me wrong. I'm not knocking it. I'm a f*cking musician, for crying out loud. I was perfectly happy to toil in poverty 6 days a week until my daughter was born, and now I still more or less toil in poverty at my day job, but my wife gets to stay home and take care of my daughter and I get weekends off. If I had the chance to go back to music full time at something close to my current salary, I would be there in a heartbeat, but it was an eye-opener for me to get a "real world" job where almost all of your coworkers are competent and reasonable and you get paid enough money to actually support a family. It's not as rewarding in some ways, but I sure am less stressed out these days.

Get the game companies to stop me from going to the underdogs to download a game I haven't played in 10 years. Why do I go there? Because "Spaceward Ho!" is fun to play. Because "Star Control 2" is fun to play. Because "Master of Orion II" is fun to play. WoW, Civ IV, and RE:4 showed me that it is still possible to make good, fun to play games in these dark gloomy times. And guess what, you can make money off it!

Your audience is averaging 30 yrs of age now, stop shoveling testosterone laden regurgitated crap at us, and give us something worth tossing $55 dollars on. Give me something worth buying, instead of b*tching about used games and that we are not buying the "right" games.

Oh, and fire all your marketing exec's. All of them. They have been brainwashed into thinking we are all 18 yr olds that want to see boobies and things getting f*cked up.

P.S. Where is Elysium's new bearded, creepy avatar? He owns the site and he does not get one?

"Nation, I've always said that rainbows are just God's way of frowning at gay people." Stephen Colbert